Secure Trust Bank’s share price plunged seven per cent today after the challenger reported an 11 per cent fall in underlying pre-tax profit in the first six months of the year.
The group also today re-emphasised its strategy of moving away from “higher risk, higher margin” consumer lending.
Chief executive Paul Lynam admitted the shift has had a short-term impact on Secure Trust’s profits.
He added that he has been surprised that some other lenders, amid warnings on consumer credit from bodies such as the Bank of England, “are seemingly not adjusting their risk appetites and carrying on regardless”.
“We have been calling out the need for more caution in consumer lending for over 18 months and more recently in asset finance lending,” he told City A.M.
“It is interesting that the CEOs of Nationwide and Santander have also flagged the need for caution in recent times, and obviously that chimes with what [the Bank of England and the Financial Conduct Authority] are saying. There are a growing number of people suggesting more caution is advisable and, not surprisingly, I agree with them.”
Secure Trust Bank’s shares fell seven per cent to 1,700p today.
Goodbody banking analyst John Cronin attributed this fall to the profits dip and to concerns over the bank’s remaining exposure to legacy unsecured lending. The bank’s shares may also have been affected by Provident Financial’s collapse on the stock market today, he added.
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